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Harsha Engineers International Limited Earnings Presentation – FOR Q2/H1 FOR FY27
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2 Privileged & Confidential, © 2022, All Rights Reserved. 48 63 153 0 171 78 219 33 40 247 123 38 6 128 195 191 191 191 Disclaimer/ Safe Harbor Cautionary statement regarding forward-looking statements ● This presentation may contain certain forward-looking statements relating to Harsha Engineers International Limited (“HEIL”, or “Company””) and its future business, development and economic performance. These statements include descriptions regarding the intent, belief or current expectations of the Company, its subsidiaries and associates and their respective directors and officers with respect to the results of operations and financial condition of the Company, subsidiary or associate, as the case may be. Such forward-looking statements are not guarantees of future performance and are subject to known and unknown risks, uncertainties and assumptions that are difficult to predict. These risks and uncertainties include, but are not limited to (1) competitive pressures; (2) legislative and regulatory developments; (3) global, macroeconomic and political trends; (4) fluctuations in currency exchange rates and general financial market conditions; (5) delay or inability in obtaining approvals from authorities; (6) technical developments; (7) litigation; (8) adverse publicity and news coverage, which could cause actual development and results to differ materially from the statements made in this presentation. Company assumes no obligation to update or alter forward-looking statements whether as a result of new information, future events or otherwise. Any forward-looking statements and projections made by third parties included in this presentation are not adopted by the Company and the Company is not responsible for such third party statements and projections. ● This presentation has been prepared by the Company based on information and data which the Company considers reliable, but the Company makes no representation or warranty, express or implied, whatsoever, and no reliance shall be placed on, the truth, accuracy, completeness, fairness and reasonableness of the contents of this presentation. This presentation may not be all inclusive and may not contain all of the information that you may consider material. Any liability in respect of the contents of, or any omission from, this presentation is expressly excluded. ● This presentation does not constitute a prospectus, offering circular or offering memorandum or an offer, or a solicitation of any offer, to purchase or sell, any shares and should not be considered as a recommendation that any investor should subscribe for or purchase any of company’s securities in any jurisdiction. Neither this presentation nor any other documentation or information (or any part thereof) delivered or supplied under or in relation to the shares shall be deemed to constitute an offer of or an invitation by or on behalf of company. No part of it should form the basis of or be relied upon in connection with any investment decision or any contract or commitment to purchase or subscribe for any of company’s securities. ● HEIL assumes no responsibility to publicly amend, modify or revise any forward looking statements, on the basis of any subsequent development, information or events, or otherwise. Unless otherwise stated in this document, the information contained herein is based on management information and estimates. The information contained herein is subject to change without notice and past performance is not indicative of future results. HEIL may alter, modify or otherwise change in any manner the content of this presentation, without obligation to notify any person of such revision or changes. ● No person is authorized to give any information or to make any representation not contained in and not consistent with this presentation and, if given or made, such information or representation must not be relied upon as having been authorized by or on behalf of HEIL. ● This presentation and its contents are confidential and should not be distributed, published or reproduced, in whole or in part, or disclosed by recipients directly or indirectly to any other person.
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3 Privileged & Confidential, © 2022, All Rights Reserved. 48 63 153 0 171 78 219 33 40 247 123 38 6 128 195 191 191 191 Index Business Update Company Overview Summary on use of IPO Proceeds Quarter and Year End Highlights
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QUARTER END HIGHLIGHTS
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5 Privileged & Confidential, © 2022, All Rights Reserved. 48 63 153 0 171 78 219 33 40 247 123 38 6 128 195 191 191 191 Financial Highlights - QoQ PAT - Engineering CONSOLIDATEDRevenue - Engineering CONSOLIDATED EBITDA - Engineering CONSOLIDATED 6,296 6,979 8,112 17.3% 16.6% 18.9% -500 500 1,500 2,500 3,500 4,500 5,500 6,500 7,500 8,500 Q2FY26 Q1FY27 Q2FY27 EBITDA EBITDA % 36,312 42,108 42,817 0 5000 10000 15000 20000 25000 30000 35000 40000 45000 Q2FY26 Q1FY27 Q2FY27 Revenue outside India (%) 56.2%60.2%60.8%^ 3,570 3,528 4,448 9.8% 8.4% 10.4% Q2FY26 Q1FY27 Q2FY27 PAT PAT % EBITDA - Engineering INDIA PAT - Engineering INDIA 3,499 3,932 4,579 13.2% 12.7% 13.9% Q2FY26 Q1FY27 Q2FY27 PAT PAT % Revenue - Engineering INDIA 26,594 30,996 32,997 0 5000 10000 15000 20000 25000 30000 35000 Q2FY26 Q1FY27 Q2FY27 Revenue outside India (%)^ 42.5% 46.3%^ 44.7% 5,881 6,950 7,832 22.1% 22.4% 23.7% 1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 9,000 Q2FY26 Q1FY27 Q2FY27 EBITDA EBITDA % ₹ in Lakhs EBITDA = Profit/ (Loss) Before Taxation+ Depreciation and Amortisation + Finance Cost ^ Restated
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6 Privileged & Confidential, © 2022, All Rights Reserved. 48 63 153 0 171 78 219 33 40 247 123 38 6 128 195 191 191 191 Business Update The consolidated revenues in Q2 / H1 FY 2027 have grown by 16.3% and 20.7% respectively on YOY basis. On a QOQ basis, a minor de-growth of around 3.8% in Q2 is largely attributable to sales de-growth in the solar business and in our International subsidiaries. The consolidated EBITDA margins have improved showing a growth of around 28% and 18.7% in Q2 and H1 FY 2027 respectively on YOY basis, also resulting into a consequential improvement in the PAT margins on YOY basis. Our India engineering business (HEIL + Advantek) has posted a strong revenue growth of 24.1% and 22.5% in Q2 and H1 FY 2027 respectively on YOY basis reflecting continued strong demand trends in India in all key segments. The improvement in EBITDA and PAT margins in our India engineering business on YOY basis as well as QOQ basis is largely attributable increased revenues, raw material pass through and reduced losses in our WOS Harsha Advantek. Our WOS Harsha Advantek has reported loss in Q2 FY 2027 of Rs. 3 crores However, backed by a strong expected sales growth in H2, Advantek is expected to become PAT positive in H2. Sales of Bushings stood at Rs. 42 crores and Rs. 76 crores in Q2 and H1 FY 2027 respectively showing 42.5% and 39% growth respectively on YOY basis, and we are on track for achieving the full year growth target of approx. 30%.
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7 Privileged & Confidential, © 2022, All Rights Reserved. 48 63 153 0 171 78 219 33 40 247 123 38 6 128 195 191 191 191 Business Update Sales of Stampings stood at Rs. 23 crores and Rs .42 crores in Q2 and H1 of FY 2027 respectively showing a strong 109% and 65% growth in Q2 and H1 FY 2027 on YOY basis, again reflecting continued strong demand trends and contributions coming from new varieties of Stampings commercialised during the year. Sales of large-size Cages stood at Rs. 14 crores and Rs. 24 crores in Q2 and H1 of FY 2027 respectively. Though sales growth appears flat in Q2, a strong growth is expected in H2 of FY 2027 backed by good demand visibility. Sales to Japan based customers stood at Rs. 24 crores and Rs. 44 crores in Q2 and H1 FY 2027 respectively showing a growth of around 30% and 28% respectively on YOY basis, reflecting a pick up in the momentum in the sales in this segment. Harsha Romania’s continued underperformance with negative EBITDA and PAT in Q2 and H1 of FY 2027 is offset by the continued good performance of Harsha China resulting into a combined net loss of around Rs. 1.70 crores in Q2 FY 2027 and around Rs. 5 crores in H1 FY 2027. With a firm strategy of downsizing of operations coupled with corresponding cost reduction being implemented for Harsha Romania, the targeted combined loss of foreign subsidiaries on a full year basis will be a low single digit number. Harsha Advantek as well as Harsha China Brownfield expansion project implementation is on track. The company has incurred a Capex of Rs. 72 crores on a consolidated basis in H1 of FY 2027.
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8 Privileged & Confidential, © 2022, All Rights Reserved. 48 63 153 0 171 78 219 33 40 247 123 38 6 128 195 191 191 191 Consolidated P & L Statement EBITDA = Profit/ (Loss) Before Taxation+ Depreciation and Amortisation + Finance Cost (₹ in Lakhs) Particulars Q2 FY27 Q1 FY27 Q2FY26 FY25-26 REVENUE : Revenue from Operations 44,009 45,743 37,834 1,62,679 Other Income 696 513 1,031 3,798 TOTAL REVENUE 44,705 46,256 38,865 1,66,477 Share of Profit of Joint Ventures 13 3 14 53 EXPENSES : Cost of Material Consumed 23,394 24,238 20,278 87,584 Change in Inventories of Finished Goods & Work-in- progress (2,126) (232) (971) (2,684) COGS 21,268 24,006 19,307 84,900 Employee Benefits Expenses 6,070 5,915 5,271 21,500 Other Expenses 9,195 9,077 7,905 32,313 EBITDA 8,185 7,261 6,396 27,817 Margin % 18.6% 15.9% 16.9% 17.1% Finance Costs 614 583 305 1,626 Depreciation and Amortization Expense 1,424 1,378 1,134 4,666 PROFIT BEFORE TAXATION 6,147 5,300 4,957 21,525 Tax Expenses 1,644 1,562 1,313 6,005 PROFIT AFTER TAXATION 4,503 3,738 3,644 15,520 PAT Margin% 10.2% 8.2% 9.6% 9.5% Other comprehensive income 220 648 (270) (745) Total Comprehensive Income 4,723 4,386 3,374 14,775 Basic Earnings per Share - In ₹ 4.95 4.11 4.00 17.05 Diluted Earnings per Share-In ₹ 4.94 4.11 4.00 17.05
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9 Privileged & Confidential, © 2022, All Rights Reserved. 48 63 153 0 171 78 219 33 40 247 123 38 6 128 195 191 191 191 Certain Key Parameters and Break Up EBITDA = Profit/ (Loss) Before Taxation+ Depreciation and Amortisation + Finance Cost Particulars Q2 FY27 Q1 FY27 Q2FY26 FY25-26 Revenue from Operations - Engineering & Others - Consolidated 42,817 42,108 36,312 1,44,356 - Engineering & Others - India 32,997 30,996 26,594 1,08,816 - Solar - EPC and O & M 1,192 3,635 1,522 18,323 EBITDA - Engineering & Others - Consolidated 8,112 6,979 6,296 26,385 - Engineering & Others - India 7,832 6,950 5,881 25,957 - Solar - EPC and O & M 73 282 100 1,432 PAT - Engineering & Others - Consolidated 4,448 3,528 3,570 14,513 - Engineering & Others - India 4,579 3,932 3,499 15,515 - Solar - EPC and O & M 55 210 74 1,007 Other Income - Interest Income 386 396 283 1,206 - Gain / (Loss) on Exchange Rate Fluctuation (34) (647) 370 882 - Miscellaneous Income 26 62 33 210 - Gain / (Loss) on Sales of Investment in Subsidary Co. /Associates - - - - - Gain / (Loss) on Sale of Investment (Mutual Fund) 40 70 27 2,179 - Gain / (Loss) on Fair value of Investments (measured at FVTPL) 278 632 318 (679) - Total Other Income 696 513 1,031 3,798 (₹ in Lakhs)
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10 Privileged & Confidential, © 2022, All Rights Reserved. 48 63 153 0 171 78 219 33 40 247 123 38 6 128 195 191 191 191 Working Capital – Consolidated – Key Parameters Revenue from operations annualised and used as denominator for No. of days calculation. (₹ in Lakhs) H1 FY27 H1 FY26 FY 25-26 1 Inventories a. Raw Material - Amount 11,460 7,451 8,597 No. of Days 23 18 19 b. Semi Finished- Amount 3,573 3,290 3,310 No. of Days 7 8 7 c. Finished - Amount 17,479 13,598 14,642 No. of Days 36 33 33 d. Stores & Spares and Tooling - Amount 14,641 12,717 12,849 No. of Days 30 31 29 2 Receivables - Amount 38,747 34,226 37,796 No. of Days 79 84 85 3 Trade Creditors- Amount 19,730 14,104 19,266 No. of Days 40 35 43 Sr. Particulars
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Company Overview
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12 Privileged & Confidential, © 2022, All Rights Reserved. 48 63 153 0 171 78 219 33 40 247 123 38 6 128 195 191 191 191 Harsha At A Glance Largest manufacturer of precision bearing cages in India* 5 strategically located manufacturing facilities with various warehouses at different locations worldwide – supplying products to over 25 countries across 5 continents Diversifying into complex and specialized precision stamped and bushing components Capability to manufacture bearing cages with diameters between 20mm to 2,000mm with >7,500 products manufactured since incorporation 6.5% of the market share in the global organized bearing brass, steel and polyamide cages market^ Supplies products to each of the top 6 global bearing manufacturers^^ Note : *Largest manufacturer in terms of revenue in organized sector; ^in CY2021 ^^As of 31st March 2022 50-60% of domestic market share China RomaniaIndia Schaffler AG NTN NSK TIMKENSKFJTEKT
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13 Privileged & Confidential, © 2022, All Rights Reserved. 48 63 153 0 171 78 219 33 40 247 123 38 6 128 195 191 191 191 Bearing cages Bearing cages form an important component within Bearings Separate rolling elements, reduce friction & heat generated in bearing Keep the rolling elements evenly spaced optimizing load distribution on the bearing Cages offer high rigidity, strength High heat resistant operating conditions Small portion of total cost of bearing - The global bearing cages is estimated at about 5% of the global bearings market Bearing Cages are critical components requiring highest lead time, technical & tooling expertise Comprehensive solution provider offering diversified suite of precision engineering products with diverse applications ✓ Railways ✓ Industrial machines ✓ Pumps ✓ Compressors ✓ OEMs ✓ Engine applications ✓ Crushers ✓ Steel mills ✓ Thermal turbines ✓ Windmills ✓ Agricultural machines ✓ Automotive parts ✓ Chemical machinery ✓ Utilities ✓ White appliances ✓ Chemical machinery ✓ General industries ✓ Blowout preventers ✓ Extruders ✓ Gearboxes ✓ Offshore drilling ✓ Oil rigs ✓ Traction motors for railways ✓ Railway Seal ✓ AC Compressor Head ✓ Bronze Bushing for Wind Gear Box ✓ Chassis Parts ✓ Engine Drive ✓ Clutch Components ✓ Gear Shifter Assembly Parts Global bearing companies have steadily increased outsourcing manufacture of bearing cages Given the complexity of bearing cages production , customers prefer continuing with reliable vendors for a long period for consistency of quality
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14 Privileged & Confidential, © 2022, All Rights Reserved. 48 63 153 0 171 78 219 33 40 247 123 38 6 128 195 191 191 191 Tool Manufacturing • Comprehensive tooling, testing and measurement infrastructure • Dedicated tool production facilities at Changodar have strengthened HEILs ability to meet customer demands Process Design & automation • Decades of experience – technologically driven manufacturing process enables HEIL to provide solutions in a cost-effective manner • In-house automation has helped to optimize O&M expenses, reduce production cycle time and minimize capex • Indigenously designed vision camera system detects defects that are not possible to detect with naked eye Product Development • Expertise in product development - product development cell and innovation centre Tooling Design • Expertise to design and develop advance tooling inhouse which enables HEIL to manufacture precision products • Engaged with customers to in product development process from design stage Expertise in tooling, design development and automation Full-service capabilities under one roof Product Design Support Tooling Design Tooling Manufacturing Development, Testing & Measurement
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T H A N K YO U R=56 G=87 B=35 R=83 G=128 B=52 R=115 G=140 B=75 R=181 G=210 B=134 R=120 G=155 B=186 R=191 G=191 B=191